Bishop Edir Macedo, the head of the Universal Church of the Kingdom of God, preaches at a rally in Rio de Janeiro. Photograph: Samuel Martins/AP

The leader of one of Brazil's largest evangelical churches declared his church was "at war" this week, following allegations that his organisation had siphoned off billions of dollars of donations intended for charity.

The charges of fraud and money laundering are contained in a report by Sao Paulo's public prosecutor that was formally submitted to a Brazilian judge on Monday. The report claims 10 leading members of the church – including its founder and leader, Bishop Edir Macedo – used donations from followers to buy jewellery, property and cars.

Following an investigation into 10 years of the church's financial activities, prosecutors accused church leaders of illegally channelling donations from their largely impoverished flock into overseas accounts and businesses before returning the money to Brazil where it was allegedly used to invest in media outlets and property.

"There is evidence that the donation money was used to attend to the personal interests of those being accused," the public prosecutor said in a statement.

Bishop Macedo hit back in a pamphlet distributed at the church's 11,000-capacity temple in Rio de Janeiro, a towering building that owes more to Wembley stadium than St Paul's cathedral. In the text, entitled "Persecution gives us experience", Macedo claimed his church was "fighting in a war" but that "we already know how it will end".

The allegations have dominated Brazil's front pages this week, with one Rio newspaper stamping the headline "stealing is a sin" across its front-page. A $45m (£27m) executive jet, reportedly owned by Bishop Macedo, has become the most visible symbol of the scandal.

The charges also triggered a vicious clash between two of Brazil's biggest television networks, Rede Globo and Rede Record, which is linked to the church.

Following a 10-minute report on Globo on Tuesday detailing the allegations against the Universal Church, Record responded with 14-minute story in which the newsreader accused Globo of a "direct and desperate attack" on the church's media outlet in order to damage its rising audience share. Rather than focusing on the accusations, the report highlighted the church's "enormous" social projects in South Africa, Colombia and the Ivory Coast as well as a school helping children suffering from Down's syndrome. Local followers of the church, who normally refuse to talk to the press, were quoted describing the allegations as an "injustice".

The tithe is an important part of life at the Universal Church, which was founded in 1977 by Bishop Macedo and says it follows the "prosperity theology" by which faith and commitment to a church are rewarded with material prosperity.

Since then the church has grown quickly both in Brazil and across the globe, becoming one of the most polarising forces in Brazilian society. During last year's Rio carnival, one well-known samba group carried a banner reading: "Jesus is the path and Bishop Macdeo is the toll-road."

The church, which has 20 branches in the UK, claims to have 8 million followers around the world. According to Sao Paulo's prosecutor, it raises around $800m a year from donations in 4,500 temples scattered across Brazil, from inner-city slums to dusty Amazonian frontier towns. Authorities in Brazil believe Macedo is worth around $2bn.

Speaking in Brazil's upper house, the senator Marcelo Crivella – a former Universal Church leader who is also Macdeo's nephew – said the allegations were "slanderous" and that the church would not "turn the other cheek".

"The idea that pastors took the offerings and sent them overseas in order to get rich is not new," he said.